MUMBAI/NEW DELHI: Five top executives at the Indian unit of American company Bunge have resigned amid an internal audit into possible financial irregularities at the world's largest oilseeds processor and owner of domestic edible oils brands Dalda and Amrit.

The company's director Ashish Saxena and chief financial officer Anand Vora have quit over what two senior executives with direct knowledge of the development described as "management differences" arising out of the outcome of the audit. Two other directors of the company - Sudhakar Rao Desai and Sanjay Jain - along with human resources head Sangram Chavan have quit for better prospects, the senior executives said.

"The company recently completed a compliance audit and found some irregularities in the setting up of the new oil processing plant at Kandla, Gujarat," said one of the persons quoted above.

The person said the parent company had objected to the manner in which its Indian subsidiary paid for the factory land in Kandla. Bunge was of the view that the transaction may not be compliant with the US Foreign Corrupt Practices Act (FCPA), an anti-corruption law.

Recent Instances of FCPA Non-compliance

Saxena, the director, and Vora, the company's chief financial officer, did not agree with this analysis of the transaction, the person said.

Asked if some of the exits were an outcome of the investigation under the FCPA, Bunge's global spokesperson said the company does not comment publicly on the reasons for employee departures or other personnel matters. "All of Bunge's operations are held to the highest ethical and financial reporting standards... Bunge maintains transparent and accessible corporate governance processes. The company considers any allegation of impropriety as serious, and responds accordingly, taking necessary and responsible steps to investigate and address issues. This is true in India, where we are investing to build a business for the long term," said the spokesperson.

The problem arose because of a difference in opinion on whether processes had been followed and not because of any allegation of wrongdoing, both executives quoted earlier said.

The FCPA prohibits US companies, their subsidiaries and employees from bribing officials in the US and other countries to enhance business. It also requires companies to keep books and records reflecting all transactions.

There have been several instances of Indian units of US-headquartered companies coming under scrutiny because of suspicion of lack of compliance with the FCPA. In March this year, the world's largest brewery Anheuser-Busch InBev said it is investigating its joint venture in India for possible FCPA violations. Last year, Bourbon-maker Beam Inc too said it was reviewing whether its business in India was in compliance with the FCPA.

Famously, the world's largest retailer Walmart too disclosed last November that it is investigating possible violations of the anti-bribery law in India, Mexico and other countries. In India, the probe resulted in the suspension of its chief financial officer and the entire legal team as well as a freeze on expansion plans.

In a survey by Ernst & Young in 2012, nearly three-fifths of respondents had said their companies had been subjected to fraud during the course of the previous year. "With more than 75% of the respondents working in MNCs, less than half of them were aware of global anti-graft legislations, such as the FCPA and the UK Bribery Act," said the report, titled 'Fraud & Corporate Governance: Changing Paradigm in India'.

"Kickbacks are given to win or retain business, to obtain approvals from government agencies, and to influence people to make favourable decisions," said Arpinder Singh, partner & national director (fraud investigation & dispute service) at E&Y, who authored the report.

A senior executive of a large American MNC, on the condition of anonymity, said in India, MNCs especially American companies cannot buy themselves out of trouble. They can only avoid trouble by spending more on high-integrity employees and high-quality plants and processes. "Patience is another thing we have to factor in our costs, because we just can't afford to pay speed money to expedite permissions." Â Giving an example of how rigorously American companies follow rules, the executive says, "If the Indian law says vanaspati has to melt at 41 degrees Centigrade, an American company has to adhere to it. There are no two ways about it."

India is one of the largest markets for vegetable oil, and its consumers are shifting increasingly to branded products for quality and food safety reasons. More than a decade old in India, Bunge entered the market by acquiring Dalda Vanaspati from Hindustan Unilever (then Hindustan Lever) in 2003.

Bunge, among the top sugar and ethanol producers, also bought the edible oils business of Amrit Banaspati Company for Rs320 crore two years ago, which gave it brands such as Gagan and Ginni. The Amrit acquisition also added over 200,000 distribution points in the north and northeast regions.

Bunge has edible oil manufacturing and refining plants at Bundi in Rajasthan and Trichy in Tamil Nadu.

While Bunge has been importing crude soya oil from its crushing operations in the US and South America for the Indian market, this year it completed setting up a new plant with 1,200 tonnes per day capacity at Kandla in Gujarat.